March retail inflation up as manufacturing slows February factory output

Last Updated: Sat, Apr 13, 2019 16:16 hrs
Food Inflation

New Delhi: Even as food prices pushed India's retail inflation higher in March, lower manufacturing output slowed down the country's industrial production in February, according to an official data.

The two key economic macro-data points -- Index of Industrial Production (IIP) for February and Consumer Price Index (CPI) for March -- was released by the Ministry of Statistics and Programme Implementation on Friday.

The CPI inflation in March rose to 2.86 per cent from 2.57 per cent during February as the Consumer Food Price Index (CFPI) increased to 0.30 per cent from (-) 0.73 per cent in February 2019.

However, on an year-on-year (YoY) basis, CPI in March 2019 (2.86 per cent) was lower during the corresponding period of 2018, with retail inflation rate of 4.28 per cent.

The CFPI rose by 2.81 per cent in March 2018.

Product-wise, the prices of milk-based items, egg, meat and fish increased in March YoY. In contrast, a deflation trend was witnessed in the cost of vegetables and pulses.

Prices of milk-based products rose marginally by 0.78 per cent, while egg became dearer by 1.45 per cent and meat and fish prices recorded a rise of 6.55 per cent.

On a sub-category basis, vegetable prices reduced year-on-year in March (-)1.49 per cent. The category of "pulses and products" became cheaper (-)2.25 per cent and that of "sugar and confectionery" (-)6.12 per cent.

In terms of IIP data, the growth rate of country's factory production was flat in February 2019 as it inched up by just 0.1 per cent from 6.9 per cent reported for the corresponding month of 2018.

Even on a month-on-month basis, the IIP was lower than 1.43 per cent reported during January 2019.

"The cumulative growth for the period April-February 2018-19 over the corresponding period of the previous year stands at 4 per cent," the Ministry said in a statement.

As per the data, the output rate of the manufacturing sector was (-) 0.3 per cent in February from a YoY rise of 8.4 per cent.

On a YoY basis, mining production edged higher by 2 per cent from (-) 0.4 per cent and the sub-index of electricity generation inched up by 1.2 per cent from 4.5 per cent.

"Food inflation turned positive in March 2019 after five consecutive months of deflation. Core inflation, proxy for demand conditions in the economy, though fell to five quarter low, it continues to be at an elevated level...," said Devendra Kumar Pant, Chief Economist and Senior Director, India Ratings and Research.

"February 2019 IIP in line with the core sector data, the factory output data for the month of February is also disappointing. At the broad classification, all the three sectors, namely mining, manufacturing and electricity, showed poor growth in February."

According to Pant, given the fluctuation in the IIP growth data, "it is difficult to believe that we are on our way to a broadbased and sustainable industrial recovery".